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Copper eases off 4-month high in cautious trade; Spain in focus

Published 02/04/2013, 05:11 AM
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Investing.com - Copper futures eased off the highest level since October during European morning trade on Monday, as sentiment turned cautious amid renewed concerns over political instability in Spain.

On the Comex division of the New York Mercantile Exchange, copper futures for March delivery traded at USD3.773 a pound during European morning trade, down 0.35% on the day.

New York-traded copper prices rose by as much as 0.3% earlier in the day to hit a session high of USD3.792 a pound, the strongest level since October 5.

Copper’s losses coincided with the euro falling to the lowest levels of the session as an escalating political crisis in Spain pushed the country’s borrowing costs higher.

Spanish Prime Minister Mariano Rajoy faced calls to resign from the country’s opposition leader, following allegations that he and senior officials in the ruling Popular Party received secret payments.

Prime Minister Rajoy strongly denied the corruption allegations in a statement on Saturday.

The yield on Spanish 10-year bonds rose to 5.34% on Monday from 5.21% on Friday, as investor concerns over the deepening political crisis mounted.

Copper prices were higher earlier in the session as indications the global economy is gaining momentum boosted appetite for growth-linked assets.

In China, the non-manufacturing Purchasing Managers’ Index rose to 56.2 in January, the highest level since August and up from 56.1 in December. A reading above 50.0 signals expansion.

China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.

Meanwhile, in the U.S., data released Friday showed that the economy added 157,000 jobs in January, while nonfarm payrolls figures for November and December were revised up by a combined 127,000 jobs.

Also Friday, a report showed that U.S. manufacturing activity improved to a nine-month high in January while consumer sentiment unexpectedly improved in January.

Copper is sensitive to the global economic outlook because of its widespread uses in construction and manufacturing.

Also on the Comex, gold for April delivery declined 0.35% to trade at USD1,664.75 a troy ounce, while silver for March delivery lost 1% to trade at USD31.63 a troy ounce.

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